Pounds to Dollars 7 June 2010

UK’s sterling suffered at the hands of the US dollar on Friday and closed the trading session on a wide spread down bar breaking below USD1.45 and confirming the doji candles of Wednesday and Thursday which had signalled such a turning point.  Clearly the recent rally for sterling against the dollar has run out of steam and as a result we can expect to see a res-test of the recent support which has temporarily been created at the USD1.4250 price area.  If this is breached then expect to see the pounds to dollars pair move lower once again with a break below USD1.40 an increasingly possibility.  In the longer term USD1.36 remains our target for the current downwards trend and with all four moving averages now weighing heavily the outlook remains negative for cable in the short to medium term.

There are  no significant fundamental releases for sterling until Thursday which sees interest rate decision, statement and details of the asset purchase scheme from the MPC while on Friday sees PPI and Manufacturing Production data.

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